EU social climate fund criticized from all quarters –

At a meeting in Brussels on Monday, December 20, EU environment ministers criticized the European Commission’s proposal for a social climate fund that would support vulnerable households throughout the energy transition. Their motivations were, however, very divergent.

The new fund aims to protect vulnerable consumers from the impact of the proposed carbon market for road transport and heating fuels. It is expected to come into force in 2025, one year before the new carbon pricing takes effect.

But while EU environment ministers have stressed the need to protect the most vulnerable households, it was clear that the proposal is unpleasant for them.

According to EU ministers, the fund is either too small to support the most vulnerable households or simply unnecessary and would require an unwanted reopening of Europe’s already agreed seven-year budget for 2021-2027, the Multiannual Financial Framework ( CFP).

Budget conservatives strike back

The social climate fund has ruffled the feathers, especially in fiscally conservative countries that would prefer to protect citizens with other sources of money, such as emissions trading system (ETS) revenues, the EU carbon market.

At the meeting of EU environment ministers, Danish representative Per Fabricius Andersen questioned whether the social climate fund was even necessary.

“Strengthening and expanding emissions trading will provide Member States with significant additional income that they can use to address potential social impacts. Therefore, we are skeptical about the need to create a new social climate fund, ”he said.

This point of view was echoed by Swedish Minister Anders Grönvall, who does not believe “that it is necessary to [a] additional budgetary mechanism ”.

Ministers are also concerned about how the European Commission plans to launch the fund. In order to ensure the money is available before the new carbon prices reach households, the EU executive must reopen the already negotiated seven-year budget, some have warned.

In its July proposal for a social climate fund, the Commission said it would “propose a targeted amendment to the multiannual financial framework regulation for the years 2021 to 2027 to take into account additional EU expenditure amounting to 23.7 billion euros for the period 2025-2027 “.

But Finnish Environment Minister Terhi Lehtonen was very critical about it, saying: “We are concerned about [the social climate fund’s] size and on the opening of the MFF agreement ”. Instead, he said that “we can all make better use of the EU funds already agreed”, without reopening the MFF.

The seven-year EU budget deal, described by some as “historic” when it was reached in December 2020, was a difficult and carefully balanced deal, which Finland would prefer not to reopen, said a Finnish diplomatic source at EURACTIV.

The source added that there is already sufficient European funding for climate investments planned in the € 1.8 trillion budget over seven years and the EU stimulus fund.

“Funding direct household income support through the EU budget is not the right way to go,” Lehtonen told fellow ministers. “We need to find other ways to deal with the potential negative social impacts on the extension of carbon pricing and to accelerate the transition,” he said.

More money needed

But other EU ministers criticized the proposed social climate fund for the opposite reason. The Czech Republic, Lithuania, Cyprus, Greece and Malta all complained that there simply was not enough money available to mitigate the negative impacts of imposing a carbon price on fuels. transport and heating.

“The proposal seems difficult from an administrative point of view and we are not convinced that it is able to sufficiently mitigate the risk,” said Czech Environment Minister Anna Hubáčková.

Poland went even further, calling on the European Commission to decouple the social climate fund from the widely criticized ETS for buildings and road transport.

The creation of the social climate fund should “not be conditional [on] the final decision to establish a new ETS for the transport and construction sector, ”said Anna Moskwa, Polish Minister for Climate and Environment.

“Due to the rise in energy prices and the need to counter the worsening of fuel poverty, work on the social climate fund should be authorized in the coming months,” she said. .

But EU climate chief Frans Timmermans insisted the two proposals are inseparable.

“No HTA, no social climate fund, so we will have to look for other ways to help our citizens,” he warned ministers earlier this year.

EU countries slam new carbon market plans as energy prices soar

The European Commission’s plan to introduce a separate carbon market for the road transport and construction sector, alongside the EU’s Emissions Trading System (ETS), has been widely criticized by politicians. EU environment ministers at their meeting last week.

“Own resources” for the EU budget

Another problem for countries like Poland is that they risk losing money altogether.

Earlier this year, the European Commission warned Warsaw that it would lose its share of the EU’s salvage money if it did not guarantee the independence of its judiciary, which will have to monitor how the money is. spent.

The conflict over the Social Climate Fund is also linked to a wider debate around EU money and an upcoming proposal to provide direct sources of revenue for the EU budget – the proposal known as own resources.

EU countries are preparing for the own resources proposal, expected on Wednesday 22 December, as it could see the European Commission withdraw part of their income from the ETS.

Without the own resources proposal or the amendment to the seven-year budget, it is not clear to EU countries how the money from the social climate fund will be obtained and how it will fit into the larger framework of EU budgeting.

As Latvian Minister ArtÅ«rs Toms PleÅ¡s said, “The publication of these proposals will give us the opportunity to finalize Latvia’s position on the creation of the social climate fund and the extension of ETS to buildings and road transport ”.

[Edited by Frédéric Simon]

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